Aug. 31, 2018 (Western Union Business Solutions) – The U.S. dollar was mostly steady on the last day of the month as gains against the euro, sterling and Canadian dollar were offset by losses against the yen. An uptick in global trade anxiety has haven assets reigning. The latest signals from Washington hint at the U.S. upping tariffs on China as soon as next week. U.S.-Canada trade relations are also in focus ahead of a deadline today for the neighboring nations to make progress on a new Nafta pact. The euro softened after area inflation cooled and unemployment steadied above 8%, a still elevated level. August has proven a rollercoaster ride for the greenback which swung from one-year highs to one-month lows. The U.S. dollar index is on track for a narrow month-to-date gain.

MXN

Mexico’s peso, along with most emerging market currencies, surrendered more ground to the greenback on the month’s final day. The peso had rallied earlier this week on euphoria over the U.S. and Mexico agreeing in principle to a trade deal. The news hasn’t been enough to supplant worries about a U.S.-China-led global trade war, a scenario that’s spurring a flight to safety in the dollar and other havens.

CAD

Will the Canadian dollar finish the month with a gain against the greenback? The answer is shaping up to be a close call with the greenback enjoying a narrow MTD gain. Talks in Washington today between the U.S. and Canada hold the keys. Should officials reach a deal, it’s liable to spur a rally in the Canadian currency given that it sends three-quarters of its exports south of the border. No deal and the U.S. dollar is likely to finish August on top. Meanwhile, Canada’s economy this week stopped short of cementing a Bank of Canada rate hike from 1.50% on Sept. 5, as growth fell short of expectations and a gauge of wholesale inflation contracted in July. Key for the loonie from the BOC’s perspective will be whether Canada indeed holds fire on a rate hike next week and whether it tees one up for October.

USD

A rollercoaster August is on track for the greenback to cling to a gain. The buck raced to 14-month highs in mid-August only to see its upswing undercut after President Trump took a swipe at the Fed for raising rates. The buck hit one-month lows this week as fears of a global trade war diminished in the wake of the U.S. and Mexico brokering a deal in principle. Once back from the holiday weekend, attention will turn to the U.S. economy with the monthly jobs report on Sept. 7. Another month of strong job growth, low unemployment and higher wages would offer a recipe for a stronger dollar as it would keep the Fed on track for a late September rate hike.

EUR

A weaker euro Friday moved below one-month highs and was pacing a narrow month-to-date loss against the greenback. A still unsettled trade outlook between the U.S. and Europe, coupled with reminders of the still fragile shape of the bloc’s economy, put a headwind on the single currency. While the euro zone’s main gauge of inflation slowed a tick to 2% in August, a reading a bit above the ECB’s preference, less volatile core inflation remained anchored at a chronically low 1% which was consistent with the economy stuck in a low gear.

GBP

Sterling was poised for a bullish week but a bearish month in which it shed more than a penny against its U.S. rival. Sterling climbed out of a bearish range against the dollar this week after the EU’s lead Brexit negotiator sounded ready to offer Britain and unprecedented trade deal. The news, though, only provided a momentary boost to the pound as it didn’t erase the risk of Britain crashing out of the bloc without a trade agreement, a scenario that could subject the U.K. economy to significant downside risk.

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Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.